v3.25.4
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Components of Income and Income Tax Expense
The domestic and foreign components of income before income taxes for the years ended December 31 were as follows:
202520242023
(in millions)
United States$6,652 $6,168 $4,506 
Foreign11,926 9,086 9,133 
Income before income taxes$18,578 $15,254 $13,639 
The total income tax provision for the years ended December 31 was comprised of the following components:
202520242023
(in millions)
Current
Federal$1,265 $1,093 $991 
State and local(198)144 127 
Foreign2,486 1,670 1,563 
Total current
3,553 2,907 2,681 
Deferred
Federal(173)(197)(180)
State and local32 (14)(18)
Foreign198 (316)(39)
Total deferred
57 (527)(237)
Income tax expense$3,610 $2,380 $2,444 
Effective Income Tax Rate
A reconciliation of the effective income tax rate to the U.S. federal statutory income tax rate for the years ended December 31, was as follows:
202520242023
AmountPercentAmountPercentAmountPercent
($ in millions)
Income before income taxes$18,578 $15,254 $13,639 
Federal statutory tax3,901 21.0 %3,203 21.0 %2,864 21.0 %
Foreign tax effects
Singapore
Statutory tax rate difference between Singapore and U.S.
(161)(0.9)%(162)(1.1)%(147)(1.1)%
Singapore tax incentive
(330)(1.8)%(644)(4.2)%(571)(4.2)%
Pillar 2 Rules
233 1.3 %— — %— — %
Other foreign jurisdictions
408 2.2 %240 1.6 %374 2.7 %
Effects of cross border tax laws
Foreign-derived intangible income deduction(204)(1.1)%(195)(1.3)%(144)(1.1)%
U.S. foreign tax credits
(259)(1.4)%(224)(1.5)%73 0.5 %
Other
140 0.8 %77 0.5 %110 0.8 %
Effects of changes in tax law
— — %— — %(688)(5.0)%
Valuation allowance
76 0.4 %113 0.7 %644 4.7 %
Other, net$(194)(1.0)%(28)(0.2)%(71)(0.5)%
Income tax expense$3,610 19.4 %$2,380 15.6 %$2,444 17.9 %
Note: Table may not sum due to rounding.
As of January 1, 2025, the Company adopted new FASB guidance related to income tax disclosures on a retrospective basis.
The effective income tax rates for the years ended December 31, 2025, 2024 and 2023 were 19.4%, 15.6% and 17.9%, respectively. The effective income tax rate for 2025 was higher than the effective income tax rate for 2024, primarily due to a change in the net tax effect of the Company’s Singapore operations, which includes the 15% global minimum tax (Pillar 2 Rules) that took effect in 2025. Additionally, a change in the Company’s geographic mix of earnings contributed to the higher effective income tax rate, partially offset by net discrete tax benefits.
The effective income tax rate for 2024 was lower than the effective income tax rate for 2023, primarily due to the 2023 foreign tax legislation enacted in Brazil and Notice 2023-55 (the “Notice”), released by the U.S. Department of Treasury (“Treasury”) in 2023. The foreign tax legislation and the Notice changed the treatment of foreign taxes paid under the U.S. tax regulations published in 2022, resulting in an expense in 2023 to establish a valuation allowance against the U.S. foreign tax credit carryforward deferred tax asset. The expense is partially offset by the Company’s ability to claim more U.S. foreign tax credits generated in 2022 and 2023. Additionally, a change in the Company’s geographic mix of earnings in 2024 contributed to the lower effective income tax rate compared to the prior year.
Singapore Income Tax Rate
In connection with the expansion of the Company’s operating headquarters in Singapore, the Company received in 2010 a tax incentive from the Singapore Ministry of Finance, which had been set to expire on December 31, 2025. Effective January 1, 2025, the Company received a new tax incentive from the ministry, which replaced the expiring tax incentive and continues through December 31, 2029. The tax incentive provides the Company with, among other benefits, a reduced income tax rate from the 17% Singapore statutory income tax rate. For 2025, 2024 and 2023, the impacts of the tax incentives received from the ministry resulted in a reduction of the Company’s income tax liability of $330 million, or $0.36 per diluted share, $644 million, or $0.69 per diluted share, and $571 million, or $0.60 per diluted share, respectively. The Pillar 2 Rules that took effect in 2025 in Singapore largely offsets the reduction to the Company’s effective income tax rate resulting from the tax incentive.
Income Taxes Paid
The Company paid income taxes, net of refunds, by jurisdiction for the years ended December 31, as follows:
202520242023
(in millions)
Federal
$1,359 $1,279 $1,194 
State
95 155 133 
Foreign
Belgium
668 562 516 
United Kingdom
330 592 429 
Brazil
168 333 254 
Other
400 331 220 
Total
$3,020 $3,252 $2,746 
Income taxes paid are not directly linked to the income tax expense recognized in the consolidated statements of operations, as cash payments reflect the timing of estimated payments, refunds, audit settlements and the utilization of tax attributes rather than the current period tax provision.
Deferred Income Taxes
Deferred tax assets and liabilities represent the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities. The components of deferred tax assets and liabilities at December 31 were as follows:
20252024
(in millions)
Deferred tax assets
Accrued liabilities$1,079 $939 
Compensation and benefits408 371 
Net operating losses221 468 
U.S. foreign tax credits802 736 
Property and equipment
482 432 
Intangible assets169 160 
Lease liabilities
143 134 
Other items246 236 
Less: Valuation allowance(974)(871)
Total deferred tax assets
2,576 2,605 
Deferred tax liabilities
Prepaid expenses and other accruals280 195 
Gains on equity investments111 112 
Goodwill and intangible assets718 760 
Right-of-use lease assets
124 116 
Other items83 125 
Total deferred tax liabilities
1,316 1,308 
Net deferred tax assets
$1,260 $1,297 
The changes in the Company’s valuation allowance on deferred tax assets were as follows:
Balance at December 31, 2022
Changes to Related Gross Deferred Tax Assets
Change/(Release)
Balance at December 31, 2023
Changes to Related Gross Deferred Tax Assets
Change/(Release)
Balance at December 31, 2024
Changes to Related Gross Deferred Tax Assets
Change/(Release)
Balance at December 31, 2025
(in millions)
U.S. foreign tax credit carryforward 1
$— $308 $327 $635 $101 $— $736 $66 $— $802 
Net operating and capital losses 2
114 12 (3)123 11 1 135 34 3 172 
Total$114 $320 $324 $758 $112 $1 $871 $100 $3 $974 
1The 2023 activity resulted in the establishment of the valuation allowance associated with the U.S. foreign tax credit carryforward due to foreign tax legislation enacted in Brazil and the Notice released by Treasury.
2Capital losses are included within other items in the deferred tax assets section of the components of the Deferred Income Taxes table above.
The recognition of foreign tax credits is dependent upon the realization of future foreign source income in the appropriate foreign tax credit basket in accordance with U.S. federal income tax law. The recognition of the net operating and capital losses is dependent on the timing and character of future taxable income in the applicable jurisdictions. As of December 31, 2025, the Company had a foreign tax credit carryforward and tax effected net operating loss carryforwards of $802 million and $221 million, respectively. The foreign tax credits begin to expire in 2029 and the majority of the net operating losses can be carried forward indefinitely.
A reconciliation of the beginning and ending balance for the Company’s unrecognized tax benefits for the years ended December 31, was as follows:
202520242023
(in millions)
Beginning balance$304 $431 $414 
Additions:
Current year tax positions38 37 23 
Prior year tax positions 1
68 34 16 
Reductions:
Prior year tax positions 1
(93)(189)(7)
Settlements with tax authorities— — — 
Expired statute of limitations(6)(9)(15)
Ending balance$311 $304 $431 
1Includes immaterial translational impact of currency.
As of December 31, 2025, the amount of unrecognized tax benefit was $311 million. This amount, if recognized, would reduce income tax expense by $252 million.
The Company is subject to tax in the United States, Belgium, Singapore, the United Kingdom and various other foreign jurisdictions, as well as state and local jurisdictions. Uncertain tax positions are reviewed on an ongoing basis and are adjusted after considering facts and circumstances, including progress of tax audits, developments in case law and closing of statutes of limitation. Within the next twelve months, the Company believes that the resolution of certain federal, foreign and state and local examinations is reasonably possible and that a change in estimate, reducing unrecognized tax benefits, may occur.  While such a change may be significant, it is not possible to provide a range of the potential change until the examinations progress further or the related statutes of limitation expire. The Company has effectively settled its U.S. federal income tax obligations through 2014. With limited exception, the Company is no longer subject to state and local or foreign examinations by tax authorities for years before 2014.